Iraqi Kurdistan Pursues Oil Exports to Turkey

The Kurdistan Regional Government (KRG) will build a new oil pipeline linking northern Iraq with the Mediterranean port of Ceyhan in Turkey. Iraqi Kurdistan's natural resources minister, Ashti Hawrami, announced the agreement with the Turkish government at an Istanbul energy conference in late October. The new pipeline could carry up to a million barrels (mbp) of oil per day by the end of 2014 and would completely bypass Iraq's existing pipeline network controlled by the central government in Baghdad.

Washington has expressed concern that such activity would increase Kurdish autonomy, which could lead to calls for independence in the north. The Kurdish enclave already operates with substantial independence from Baghdad, having its own defense forces and public services. Kurdish non-energy exports are also decreasing the KRG's dependence on the central government for its regional budget. According to Iraq's constitution, all oil export revenue must go through the central government, but Exxon, Chevron, and the French company Total signed exploration agreements separately with the KRG.

Baghdad still controls some of the energy production in northern Iraq and recently awarded BP rights to develop the oil fields in the disputed, and energy rich, area of Kirkuk. Additionally, work to increase the capacity of the existing Baghdad-controlled pipeline from Kirkuk in northern Iraq to the Ceyhan pipeline is nearing completion. Originally designed to transport 1.6 mbp per day, the pipeline fell in disrepair after years of UN-led sanctions against Saddam Hussein. Modern pumping equipment should increase output through this conduit to 400,000 mbp.

Increasing export capacity will bring more of Iraq's oil to market within the next few years, providing revenues for Turkey, Baghdad and the KRG. That, however, makes the sharp disagreements regarding contracting rights between the central government in Baghdad and the KRG a potential source of broader regional instability. There is a large, and sometimes restive Kurdish community in southern Turkey and a newly empowered Kurdish community in northeastern Syria where Kurdish militias have declared self-rule. The Kurdish region of Iraq shares borders with both, potentially giving Kurds adjoining autonomy across three countries.

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